This is exactly true. The fact is, people LIKE their bridges to nowhere, and politicians get elected by bringing home the swag. And while everyone talks a good game about wanting fiscal restraint, they always want someone else to bear the burden. Any politician who goes home and says to his constituents, “Hey everyone! I just helped pass a bill to cut your benefits by 10%” will find himself an ex-politician soon.
If you look at the chart at tax freedom day the tax burden/tax responsibility of the average american hasn’t changed much since 1995. In 1995 it was on April 25th and in 2005 it was on April 17th. If you look at tax freedom day over the last 25 years the tax rate has remained pretty much static with a low of about 29% and a high of about 33%.
http://www.taxfoundation.org/UserFiles/Image/Tax-Freedom-Day/2005-TFD1-LARGE.jpg
And this implies that revenues in 2004 were only 1.8-1.9 trillion
http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0
I see your point about how more tax revenue can lead to more spending. However the tax rate has remained more or less static the last 25 years, it has stayed in the 30% of income range give or take a few percentage points, there never was an age of Reaganite tax cuts or Clinton tax burdens, the rates barely changed by 4% at most. If you look at the last 4 years of the Clinton administration (1997-2000) the tax rate jumped to about 33%, but the deficit dropped to under $100 billion, creating a surplus of almost $100 billion in 2000. Under Bush the tax rate dropped to about 29-30% but the deficit jumped to $300-400 billion. So it is entirely possible to raise taxes a bit (from 29-30% up to 33%) and spend the extra money to balance the budget because Clinton did it in 1998, 1999 and 2000 and Bush did it in 2001.
When, since 1941, has the United States not been at war?
And yet tax revenue itself has increased dramatically, because society as a whole has gotten wealthier. The per-capita income of the United States in constant dollars is significantly higher now than it was 20 years ago.
The point is not that the rates are radically different, but that government coffers have swelled dramatically. It’s just that spending keeps going up even faster.
Sure. As I said, if you campaigned on deficit reduction, and then raised taxes enough to pay for the deficit, I have little doubt that you’d balance that budget next year. And maybe it would even stay balanced for a couple of years. But eventually, their will be a demand for more government, and politicians will drive the country back into debt. Clinton was the beneficiary of an economic boom coupled with a ‘peace dividend’. He balanced the budget mainly because revenues soared at a rate much faster than the OMB predicted. But look what happened once the economy started to turn - revenue dropped back, but since spending had increased dramatically, there was no way to go other than back into major deficits.
To run a balanced budget implies that when times are good the government is willing to run large supluses, to offset the times when the economy tanks, revenue contracts, and the government goes into deficit. Do you think that’s likely, no matter how much revenue the govenrnment brings in? Go back and look at the history of spending and revenue in the U.S., and tell me that you honestly believe that if taxes are raised enough, the government will get out of the red and stay there.
I firmly believe that if you raise taxes, you’ll get more government. Period. Governments will always spend every dime they have, and keep spending until they’ve borrowed so much that it becomes politically unpalatable to borrow more. Therefore, the only solution is to choke off funds to the government to keep the overall spending level as low as possible.
Furthermore, governments should learn that if they borrow money this year, that means next year will be even tougher. Having taxes as an ‘out’ removes even that little bit of fiscal reality from their decision-making.
The only way you’ll ever get me to support raising taxes as a deficit reduction measure is to tie tax increases to equivalent spending cuts. You have a 300 billion dollar deficit, and want it balanced? Fine. Cut 150 billion from the budget, and you can raise the other 150 billion in tax. Even that is being generous, because it still leaves you with a government with 150 billion more in revenue. But at least it would slow the growth of the beast.
As further evidence, you might want to look at the deficits Euro nations are running, despite having much higher taxes and lower defense spending. Every time they’ve raised taxes, it has just increased the demand for more public spending. And look at the economic condition Europe is in now.
The current national debt is already more than 8 trillion dollars. Do you really believe the debt will remain at that level for the next 20 years?
You don’t seriously believe that failure to cut spending, despite a minority in both houses of Congress, is somehow the Democrats fault, do you? Failure to cut spending can be laid at no one’s feet except the Republicans. They lack the will to make meaningful cuts. Until they grow a spine, tax cuts should be off the table. Anything less is just pandering to the base with staggering consequences looming down the road.
By all means, show us the deficiet of these European countries.
From the CIA factbook:(I believe that all figures are in USD)
France:
revenues: $1.005 trillion
expenditures: $1.08 trillion, including capital expenditures of $23 billion (2004 est.)
Germany:
revenues: $1.2 trillion
expenditures: $1.3 trillion, including capital expenditures of NA (2004 est.)
Italy:
revenues: $768.9 billion
expenditures: $820.1 billion, including capital expenditures of NA (2004 est.)
Cite, please? Running a decifit raises interest rates and crowds out investment, neither of which are particularily good for the economy.
No, not at all. The Republicans have totally failed, and a pox on both their houses.
This doesn’t change the fact that when Republicans actually propose social cuts, the Democrats always play the, “Evil Republicans are hurting the sick, the old, and the poor!” card.
They’re both guilty.
EU Mulls Budget Deficit Sanctions
Germany’s deficit is almost 4% of GDP, and France’s is around 3%. I believe it’s the Maastricht treaty that limits Euro countries to a maximum of 3% of GDP for a deficit. Italy has also been over the limit.
In comparison, the U.S. deficit is around 2.5%.
Thats only two countries (and the worst two I might add) out of all of Europe. Countries like Norway and Spain actually are currently running surpluses.
But Germany and France are the two largest economies on the continent. Their combined GDP is more than a third of the total EU GDP. And Sam’s point , I think, was that these two large economies have greater deficits as a percentage of GDP than the US does.
What I still don’t get (sorry, I get angry about these sort of things, if someone alreay brought this up, let me know) - is, WHO IS MAKING THE INTEREST ON THE DEBT!!! Do random people with bonds make the interest? Do other countries draw resources away from our country?!? Does the Bush family make the interest, his buddies??? I have not been able to find a clear answer and I never took a modern US politics course, so my anger builds…
Most of the national debt is in the form of Treausury bonds that have been purchased by foreign central banks, led by Japan and China. They receive the bulk of the interest paid on the debt. But they are not deserving of your anger, that should be directed at Congress for failing to cut spending while cutting taxes, and the President, who has never seen a spending bill he didn’t like.
From your cite:
Keep in mind the official debt is $8 Trillion. This cite is only looking at the marketable securities of $4.1 Trillion. The foreign holdings are for both public and private entities.
Half of the debt is held by Social Security and Medicare (this is the non-marketable portion). Those two agencies receive about half the interest. Of the remaining half, about half (one quarter) goes to foreign governments, companies and individuals. The other quarter presumably goes to US companies and individuals.
No. But I’m saying if we did (via a balanced budget amendment or something like that) then inflation would eat away at the debt which may be wiser than repaying it today. An 8 trillion debt won’t matter as much in 2025 when the US government collects about 4-5 trillion in revenues on a 25 trillion dollar economy.
http://www.optimist123.com/optimist/2005/11/pie_chart_of_wh.html
In 1988, U.S. government agencies, trust funds, and Federal Reserve banks owned about 30 percent of the debt, private financial institutions held nearly 40 percent, and the remainder was owned by state and local governments (11 percent), U.S. individuals (7 percent), and foreign/international holders (13 percent).
Got to love pie charts. I think most of it comes from taking money out of social security and things like US bonds or T Bills. do you have any savings bonds in a safe deposit box? Those things are considered a good way (or were before the $15 trillion NYSE became popular).
Suffice it to say I barely understand it. From what I gather alot of it comes from US bonds and T Bills and it comes from taking money out of the social security trust fund. However SS trust funds are supposedly just US treasury bonds. Somehow or another we owe it to ourselves.
It would be free only if they hadn’t paid for it, right?
I supported balanced budgets until I read Keynes. Then I read Milton Friedman, and started studying accounting and realized budgets are barely worth the paper they are printed on.
This site, the NCLS, has alot of information on balanced budgets and spending at the state level. 35 states have a tax or expenditure limit (TEL). About half enacted after the '92 recession, and thus were not ‘tested’ until the 2000 recession.
IMO, balanced budgets do not work. The last recession created far greater hardships then necessary, because of those requirements. When a recession hits, revenues decrease, yets more state services are usually required, but cannot be funded.
Cite The Bell Center concludes in its 10-year review of the Taxpayers’ Bill of Rights (TABOR) in Colorado that TELs in the state have indeed limited government, that education and health programs have borne a disproportionate share of cuts, that TABOR prevents state budgets from recovering after recessions, and it has diminished the role of elected officials (note 5).
As far as the public debt, I grew less worried when I learned the largest holders of the debt are ourselves. About half is owned to federal pension funds, the rest mostly to state and private pension funds. What happens when everyone retires?
I expect(hope) the anti-immigration crowd will become a little quieter.
Also the budget does not count as assets all the federal lands and property held in stewardship that could be sold in it had to be (say goodbye the party of that administration though.)